I suppose this shows the limits of democracy when information, knowledge, and ultimately power are unequally distributed.…
This obscure theory validates, with its authority, a big economic mistake that sounds like common sense but is actually snake oil — the notion that the federal government budget is like a household budget. Actually, it isn’t. Your household doesn’t collect taxes. It doesn’t print money. It works very differently, yet the nonsense that it should behave exactly like a household budget gets repeated by politicians and policymakers who really just want to squeeze ordinary people.…
Thanks to the [CAB] estimate, the governments of Italy or Spain, for example, are supposed to force the economy toward some ideal economic condition, the definition of which is obviously quite controversial and has so far rewarded those countries that have implemented labor market deregulation, cut pensions, and even changed the way elections happen. Again, it’s a control mechanism.
In the U.S. this scenario plays out, too, although less strictly. Talk about the budget often relies on the same shifty and politically-shaded statistical tools to support one argument or the other. Usually we hear arguments that suggest we have to cut social programs and workers’ rights and benefits or face economic doom. Tune in to the presidential debates and you’ll hear this played out — and it isn’t strictly limited to one party.…
When children don’t get good educations, the production of knowledge falls into private control. Power gets consolidated. The official theoretical frameworks that benefit the most powerful get locked in.
In the economic field, we need to engage different points of view and keep challenging dominant narratives and frameworks.…Naked Capitalism
The Sneaky Way Austerity Got Sold to the Public Like Snake Oil
Orsola Costantini, Senior Economist at the Institute for New Economic Thinking
Now ive heard it all this guy is blaming it on private education. ..
ReplyDeleteAs I commented on NC, I think this article is reading history all wrong.
ReplyDeleteAs Tom has pointed out before, the capitalist welfare state originated with Bismark, not out of compassion but to head off the threat of a socialist revolution. Likewise in the US the welfare state originated with deficit hawk FDR, who really didn't like welfare and didn't like deficits, but he faced the very real threat of a revolution not to mention a 3rd party threat from Huey Long. FDR adapted a watered down version of Long's economic program to "steal his thunder."
This begrudging tolerance of the welfare state continued through the cold war as the establishment felt it had to demonstrate that capitalism could provide a better life than communism.
Then David Rockefeller bought the Presidency by way of Jimmy Carter who immediately launched an austerity program. The left didn't know how to react to the OPEC oil shock and resulting stagflation and trade deficit, giving rise to Reagan and Thatcher.
The final blow to the welfare state came with the fall of the USSR. With the threat of a leftist revolution neutralized, the business class no longer felt the need to maintain the welfare state, and there was less justification for deficit spending on the military. "There is no alternative," they told us.
Think tanks and such may have played a minor role in shaping policy but IMHO it was always the 1%'s fear of loosing their necks that gave us the welfare state and the willingness to deficit spend in peacetime.
Completely OT but a new study says retirement makes people happier and healthier.
ReplyDeleteI get tired of JG advocates telling me that what middle aged people really need to be happy is a dead end minimum wage job. :-) Funny how the people making those claims are rarely middle aged.
it was always the 1%'s fear of loosing their necks that gave us the welfare state and the willingness to deficit spend in peacetime.
ReplyDeleteYep. In fact it was obviously forthcoming when the USSR disintegrated and Deng liberalized the Chinese economy. Then the pressure of a socialist alternative was off the table.
The only thing missing was a new Red Scare to rationalize continuance and amplification of funding the military-industrial-governmental complex cum revolving door.
That rationale fortuitously appeared the R2P (right to protect) doctrine, along with access to oil being necessary for national security, and now Russian expansionism.
At bottom is all about money (wealth) and power (control). It's maximizing utility on a global scale. That's what neoliberalism, neo-imperialism and neocolonialism are about. It's a historical morphing of the previous system of competing ruling elites, imperialism, and colonialism.
I get tired of JG advocates telling me that what middle aged people really need to be happy is a dead end minimum wage job. :-)
ReplyDeleteI think you are criticizing the JG for things that it is not designed to do. The JG does two things and does them well.
1. Replaces the buffer stock of unemployed with a buffer stock of employed.
2. Creates a price anchor that ties nominal value to the cost of unskilled labor.
The JG is not supposed to be the basis for a welfare state. It is one component in a capitalist economic system that makes the system more efficient by reducing waste through unnecessarily idling available resources. Based on a PKE understanding of monetary production economies, that's likely to be all capitalist economies simply because effective demand is variable for reasons set forth.
The rationale for the JG is macroeconomic. Even in a market state, a JG would be required for efficiency in any economy that departed periodically from general equilibrium at optimal use of available resources.
While it arguably has welfare benefits, they are incidental and cannot be considered as being offered as anything but a component in a much larger welfare package in which plays a role in prioritizing people ahead of property.
Who is served by either type of buffer stock? Not me.
ReplyDeleteThe JG "price anchor" is an unsubstantiated claim based on questionable assumptions -- that inflation is driven by labor, in particular by unskilled labor, that labor is a fungible commodity, and that JG spending would be the only driver of deficit spending, never mind the military, ag subsidies, tax cuts for the rich, health care, etc..
If MMT doesn't want the JG to be the "basis for a welfare state" then MMT should not publish books titled "Work Not Welfare" and instead should insist that MMT core values include a comprehensive safety net.
Agree that the JG should be considered "incidental component in a much larger welfare package which prioritizes people ahead of property." However, that is not how the JG has been designed and marketed by mainstream MMT.
Minsky seems to have got his ELR idea from Randolph & Rustin's Freedom Budget and then redesigned it to fit his petite bourgeois values. The petite bourgeois influence on the JG continues today with Tcherneva, Wray, and Mitchell. While the poor and working class might support a MMT JG given no other alternative, I think if given the choice they might prefer the proposals by Henry Wallace, Abba Lerner, Randolph & Rustin, MLK, etc.. Whether the Minski-ization of the full employment proposal has made it more politically viable is a moot point because it has never come to pass.
That may be but the MMT economists are economists and academic ones at that, rather than political figures. They are operating within a prevailing system and suggesting tweaking it to make it more efficient and effective economically, which yields social benefits as well. In so far as they speak politically, they speak as engaged individuals and citizens informed by a knowledge of economics.
ReplyDeleteEven through MMT advocates are still few in number, a range of political views are in evidence, even while agreeing in general on the economic analysis. This seems the case even among the MMT economists and financial people. For example, Bill Mitchell is probably the most radical while Warren Mosler the most conservative with others scattered along the range.
I don't see any way to reform the present system myself, but my conclusion is that change through reform generally comes slowly and it is path dependent. Moreover, reform is never secure against asymmetrical power.
But I'll take what incremental change we can get before the revolution if it ever occurs.
Even if there were revolution, the outcome would not be substantially better than the present if there were no general rise in the level of collective consciousness, and that is a much broader matter than economic.
As it is, the advocates of the market state based based on neoliberalism, neo-imperialism, and neocolonialism. with concomitant endless war, are ascendant politically and economically.
Bismarck was NOT afraid of the communists!
ReplyDeleteThe German welfare state, like the others, evolved largely because capitalists needed trained workforces, a limit on social violence, and indeed markets (think Fordism). Polanyi got it right in the Great Transformation.
Well if "stability leads to instability!" is true then why not "unemployment leads to employment!"... iow its all just some sort of "natural" cyclical phenom and "eventually it will come back!"....
ReplyDeleteTom:The JG is not supposed to be the basis for a welfare state.
ReplyDeleteYes, it is - at least according to the MMT (& the better Keynesian etc) economists IMHO. Truckloads of evidence for this are available. Dan Lynch just provided some.
The JG is not "incidental", but central. More important than the rest of the proposals put together. And the MMT economists (& their forgotten and misunderstood predecessors) are right about this, because they've thought much more and much more carefully. Of course all the MMTers insist that their core values and proposals include a comprehensive safety net. But they are able to separate their own core values, which while nearly universal, are still somewhat debatable, from things like a JG or reserve accounting, which are matters of fundamental rationality and logic.
The JG is does not come from "petit bourgeois values" - which knowledge of its history shows. Poor people always and everywhere when polled support jobs over all the other alternatives. Could it just possibly be that they are the logical, rational thinkers? That they have already attained a higher level of collective consciousness? But how does one change the minds of people who are certain that these things can't be true?
The rationale for the JG is macroeconomic.
No, the deeper rationale is that a society without one is unfree, insanely irrational, violently opposed to the freedom of those it pretends are its individual members. In the death-grip of those who think they are superior beings because they were born with a little more. The enormous and demonstrated macro benefits compared to anything else are real and a very strong argument for it, but they're a side effect.
The billionaire class understand things, just like the poor do, just as the deluded middle doesn't. A modern monetary society without a JG has the (most depraved and corrupt) rich firmly in control of everyone else. All the other welfare junk, which they can dole out to those who they think are lesser beings, doesn't do anything at all to them, if it doesn't employ everyone who wants to be employed. With a JG, which they hate above all else, they aren't on top, permanently. As they know very well and say with absolute clarity once in a while.
The JG is not "incremental change", "reform", a "tweak". But perhaps a higher consciousness is needed to recognize what is same old, same old, what is radical, what is revolutionary, what is a careful and correct argument, what is a higher consciousness. And what is not.
No, the deeper rationale is that a society without one is unfree, insanely irrational, violently opposed to the freedom of those it pretends are its individual members. In the death-grip of those who think they are superior beings because they were born with a little more. The enormous and demonstrated macro benefits compared to anything else are real and a very strong argument for it, but they're a side effect.
ReplyDeleteIf that is true, I would like to hear it from some of the MMT economists. What I hear them saying is that given the current assumptions, macroeconomics that supports growth, full employment, and price stability is not possible over time. MMT suggests that it is possible. This provides a macroeconomic rationale for a policy that is consistent with optimizing growth and employment while keeping the price level relatively stable. It's supposed to be a policy that people across the political spectrum can readily see is effective at achieving current objectives wrt growth and keeping the price level relatively stable while decreasing the waste of idling resources unnecessarily. As far as I can tell, it's presented as a tweak rather than a reformation.
For example, as far as I can tell, MMT economists are OK with accommodating saving that flows mostly to the top on the ground that saving is not spending and acts as a tax. There is no consideration of the status, privilege and power that accumulated wealth bestows, resulting in government capture and a double standard of justice, not to mention a playing field that is tilted toward rent flowing upward. While Bill Black and Michael Hudson, who are associated with UMKC, are vocal about this, I would not say that either are representative of MMT.
Note that I am not faulting the MMT economists for taking a macro stance on such issues rather than a normative or political one. I think that the economic case they make is strong. I just don't see it as any more than an improvement to an existing economic system that needs an thorough overhaul socially and politically as well as economically, first to purge the rot, and secondly, to put people before property.
As I see it, the basic question here is whether MMT is political as well as economic. And if so, is MMT not only political but also a platform for change from the left.
I don't doubt that some of the MMT economists may think that way as individuals, but I would like to hear it stated if that is the case for MMT in general.
I don't see it presented that way, and I don't think that such a presentation is needed to convince most intelligent people that it is a more intelligent rationale for economic policy than the one being pursued at present, which is pretty obviously not working for many people. Tweaking a bad system would still lift a lot of hurt off people's back even though it would not be the fix that is necessary to put people before property.
continued
continuation
ReplyDeleteMy own view that is that only a class-based "Marxian" approach that is consistent with findings of anthropology, sociology, and psychology, as well as historical evidence, can provide a foundation for a welfare state. Tweaking capitalism is never going to get there other than temporarily owing to such unique historical conditions as transpired between WWI and WWII. That was a historical aberration with little precedent and little promise, it seems. Piketty's work seems to suggest that history is returning to its accustomed pattern of social, political and economic asymmetry.
I question the notion that understanding monetary operations, applying functional finance based on a sectoral balance approach, and instituting a JG will provide any more than a temporary tweak to capitalism. It seems presumptuous to assume that policy based on FF and a JG will end rent and rent-seeking, level asymmetries, and bring a new world order without addressing the underlying issues resulting from class structure that imposes asymmetric status entailing privilege, asymmetric power entailing control and asymmetric ownership entailing distributional effects.
As the classical economists understood and Marx attempted to explain, capitalism is based on rent to the degree that market imperfections exist, that is, asymmetries. Those asymmetries are cultural and institutional, and they are put in place and held in place by those that control institutional arrangements, including government. But the classical solution was to reduce the role of government in the economy, and Marx went as far as calling for the termination of the state itself. This has shown itself to be unrealistic.
Even the loudest voices for "free enterprise" recognize that competition among those at the top involves government capture, because if you don't do it, someone else will and cut you out of the game. According to Peter Theil, competition is for losers, and entrepreneurship is about securing monopoly power.
The US already replaced sound finance with functional finance and instituted what amount to a JG at the time of the New Deal, and funded WWII with functional finance, and look how long it took for TPTB to take it back.
If the adoption of a JG were to work the magic of ending predatory capitalism as the dominant system, how long would it last if it were passed in the first place.
Now we have an MMT economist with the ear of one of the presidential candidates but one would never know it from what the says on the stump. Was he not told, did hie reject it, or did he conclude that it is not viable politically?
However, it is encouraging to see some of the American "liberal" economic heavyweights talking like Marxians about inequality and its causes in terms of asymmetries and bringing up rents, especially after Piketty. But this is counterbalanced by the usual suspects among economic heavyweights dissing the whole thing on the usual specious grounds.
The challenge is to create a social, political and economics system that transcends these boundaries. I see the understanding that MMT provides as a small step in the right direction. Moreover, it is one that could conceivably be enacted politically, although apparently not in the present environment.
If that is true, I would like to hear it from some of the MMT economists.
ReplyDeleteThey have said such things, perhaps not as strongly and stridently as I do, but there has to be listening for hearing to take place. A lot of their time is taken up by people not-listening on more elementary points - e.g. Wray at NEP right now.
As far as I can tell, it's presented as a tweak rather than a reformation.
To quote Wray at NEP from memory: "The JG changes the structure of the economy." This is not a tweak. The JG changes everything and there would be no going back, just like ending slavery. No time or energy to say more at the moment.
MMT is a Marx - inspired approach. And Marx did support a JG & said it was a revolutionary change. Took me a while & some help to understand him on this point; I wrongly criticized him here, but I think history shows he expressed himself terribly on it.
At the least: All the MMT thinkers and academics always, unanimously and consistently say that the JG is central, not incidental to MMT. So, surely you agree that you are seriously disagreeing with MMT when you say that the JG is incidental?
As our acute MMT thinkers have noted, the predatory rich do say that the JG = socialism/communism & the JG kills the predatory system. The system that of course, the predatory rich think, like slavery, is the divinely ordained state of nature & its end an abomination in the eyes of God. Why think they must be wrong? Why would MMT thinkers present these quotations if they disagreed with what the plutocrats say?
What I hear the MMT economists saying is that MMT is politically neutral and can be adapted by liberal and conservatives alike depending on preferences. Conservatives can still have their humongous military and low taxes without being concerned about funding. They just have to give up the affordability arguments wrt to social provision.
ReplyDeleteThey assume agreement that all things being equal economic efficiency is preferable to inefficiency. Everyone should have no problem recognizing that full employment is more efficient that idling resources.
MMT then points out that the reason for using unemployment as tool in targeting inflation is erroneous. The Fed reaction function based on a natural rate of interest and employment and the Phillips curve is based on wrong understanding. Policy based on NAIRU is flawed economics and should be scrapped in favor of a macro approach that is sound.
MMT also shows how a government that is sovereign in its currency and doesn't borrow in a currency it doesn't issue can always afford to purchase resources available for sale or rent. Such a government can always employ resources that would otherwise be idle.
This is a value-free non-normative position based on economic understanding alone. All that needs to happen is for economists and policy makers to recognize that certain neoclassical assumptions and analyses don't fit the facts and are being imposed ideologically in contravention of evidence the most basic of which is monetary operations.
"Sound finance" is actually unsound. This is why it is abandoned politically when conditions illuminate the limitation put on policy space unnecessarily supposedly in order to maintain price stability. But as Minsky showed, the problem of price instability arise from private credit rather than the government's fiscal stance. The GFC has also shown that monetary policy is an ineffective response.
I see nothing in this that even recognizes that the chief issue is asymmetries that result in rent, which is what return on capital is, or that these asymmetries are class-based, let alone addresses them. The ""solution" is a "kinder and gentler" capitalism.
No one is going to the barricades for MMT alone as the solution to social, political and economic problems of the day.
I think it important that activists understand MMT and I also think that this is just one aspect of what they need to know.
All the MMT thinkers and academics always, unanimously and consistently say that the JG is central, not incidental to MMT. So, surely you agree that you are seriously disagreeing with MMT when you say that the JG is incidental?
ReplyDeleteWhere did I imply that MMT is incidental to MMT. I have always held that it is integral. I have further held that it is based on macro analysis and is not simply a policy proposal that can be divorced from MMT. Some MMT economists have, I believe, implied that the JG is a policy proposal. But I don't see it as the case.
For example, IIRC, when asked whether it was necessary to include the JG when incorporating MMT analysis in policy formulation, Warren answered that it was not necessary but not to blame him if inflation resulted.
Calgacus,
ReplyDeleteWhen you have the time, explain how a JG is revolutionary. We're listening.
Calgacus,
ReplyDeleteWhen you have the time, explain how a JG is revolutionary. We're listening.
I actually agree that a JG would be revolutionary policy-wise, and depending on its design it could be very revolutionary and result in a very different form of capitalism that would be a huge step forward. But it would still be capitalism, even though the principle of putting people before property would be advanced.
I don't think that the JG should be underestimated but I don't think that it should be overestimated either.
The fundamental problems arise from pretending that asymmetries either don''t exist, or are insignificant, or are unavoidable, or are necessary. All of those positions are advanced in defense of the status quo in which class structure is determinative of the direction and pace of change.
A JG would increase worker freedom but it would not emancipate workers from wage labor, which is of the essence of modern capitalism. Wage labor is an improvement over serfdom just as serfdom was an improvement over slavery. But as long as ownership of property is placed higher on the scale of values than human rights and civil liberties, the vast majority will not be free to enjoy the fruit of their labor without being forced to pay tribute to the piracy of capital that itself produces nothing.
For this liberation, the myth of the independent individual choosing and acting free of influences rather than being socially embedded must be destroyed as a bulwark of culture. The foundations of the models of economic liberalism are fatally flawed based on this assumption that confuses with methodological individualism with ontological individualism.
Ontological individualism doesn't imply methodological individualism because individuals are socially embedded and exists in a web of relationships that influence them in many ways that individuals are not even aware. Then there are many influences that brought to bear by "influencers."
This is a Gordian knot that cannot be easily untied or solved by severing either. The many strands that bind have to be unraveled through appropriate solutions that can only be discovered through trial and error. There is no overarching theoretical approach available because the context is varied and variable.
However, a sine qua non is relative liberation of workers and a properly designed JG would go a long way to doing that by creating free space economically. Free space was available literally to Americans and immigrants to America as long as the frontier lasted, but that's over now. With that option closed, the alternative of individuals choosing their destiny by striking out into that free space ended. But the frontier mentality persists even though it is now anachronistic. It's a myth. Get over it already, and put in place another option for seizing one's destiny. Instituting a JG would be a step in that direction.And in expanding free space it would be revolutionary in capitalism. But there is lot more that needs to be done, too, in over to overcome the binding effect of capitalism on most of the population and indirectly even on the richest, since, as Hegel observed, one cannot really be free unless all are free.
A JG would increase worker freedom but it would not emancipate workers from wage labor, which is of the essence of modern capitalism.
ReplyDeleteBut a BIG would free a portion of society from a dependence on wages. In theory, it could free everyone from it. Perhaps what is revolutionary is to allow current trends to continue i.e. increasing mass unemployment, until our current notions of reciprocity can no longer be sustained.
In theory, a JG could transform how we define work and the ways in which an individual may contribute to society. And it would create an economic free space as you mentioned. In practice, it is a politically inviable option that is rapidly being eclipsed by transitions in the global economy. A JG is no longer acceptable to today's capitalism.
I remain unconvinced that a JG is revolutionary. In conjunction with other policies, it could be the basis for a peaceful transition towards a new socio-economic order. But that remains a theoretical hope. The transition from feudalism to capitalism was determined by people's actions, and it took hundreds of years.
As I said, revolutionary within capitalism.
ReplyDeleteCapitalism rests on private ownership. Historically down to the present, a small minority of people globally have owned and controlled the vast majority of financial and non-financial resources as property (including human property). Now workers are "free" to rent their time, during which they lose control of their lives and choices.
A more balance world order would have much more even distribution even if not absolute equality materially that reflects the metaphysical and legal equality of persons under liberalism.
Therefore, capitalism is antithetical to liberalism, and tweaking it doesn't change that. It was a great advance to replace slavery and serfdom with wage labor but that has resulted in debt-serfdom as well as a race to the bottom globally. Workers are not better off and won't be really free as a result of instituting a JG within the existing system, although those in countries adopting a JG will be freer.
A JG is a step toward the goal of liberalism but it is not the goal of liberalism.
Private ownership is a legal creation that is subject to democratic approval. Changing it to better serve the public interest is relatively straightforward. Doing the opposite requires trade agreements negotiated in secret.
ReplyDeleteA more balance world order would have much more even distribution even if not absolute equality materially that reflects the metaphysical and legal equality of persons under liberalism.
Sounds like equality of outcome. That's a no no.
I should explain what I mean by liberalism's assumption of "metaphysical equality" underlying legal equality, e..g., as equality before the law, absence of political privilege, and equal rights.
ReplyDeleteMetaphysical equality is based on differentiating persons from individuals. Individuals are unique and diverse. However, human beings as persons are indistinguishable from each other as members of the set of humans. That is, human share the same "nature."
This assumption is an outgrowth of the more ancient assumption that humans are composed of body mind and spirit or soul (Greek soma, psyche and pneuma). Difference results from body and mind, which are changeable while spirit or soul is unchangeable.
This assumption was associated with theology although it predates religious expression. As result with the dawn of the scientific age, the more ancient and apparently supernaturalistic ideas were replaced with naturalistic ones.
The liberal view of equality of persons and equal rights is based on this transition that occurred especially in the 18th century. It was aimed in particular at the aristocratic assumption of privilege have a natural basis in birth and the conservative assumption that some people are naturally better than others and so deserve more on this basis as well as to be privileged socially and politically.
The liberals of the enlightenment disagreed:
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."
Lincoln articulated this politically as "government of the people, by the people, and for the people."
These are two of the chief statements of American liberalism.
Here is Lincoln on capital versus labor:
ReplyDeletet is not needed nor fitting here that a general argument should be made in favor of popular institutions, but there is one point, with its connections, not so hackneyed as most others, to which I ask a brief attention. It is the effort to place capital on an equal footing with, if not above, labor in the structure of government. It is assumed that labor is available only in connection with capital; that nobody labors unless somebody else, owning capital, somehow by the use of it induces him to labor. This assumed, it is next considered whether it is best that capital shall hire laborers, and thus induce them to work by their own consent, or buy them and drive them to it without their consent. Having proceeded so far, it is naturally concluded that all laborers are either hired laborers or what we call slaves. And further, it is assumed that whoever is once a hired laborer is fixed in that condition for life.
Now there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences from them are groundless.
Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between labor and capital producing mutual benefits. The error is in assuming that the whole labor of community exists within that relation. A few men own capital, and that few avoid labor themselves, and with their capital hire or buy another few to labor for them. A large majority belong to neither class–neither work for others nor have others working for them. In most of the Southern States a majority of the whole people of all colors are neither slaves nor masters, while in the Northern a large majority are neither hirers nor hired. Men, with their families–wives, sons, and daughters–work for themselves on their farms, in their houses, and in their shops, taking the whole product to themselves, and asking no favors of capital on the one hand nor of hired laborers or slaves on the other. It is not forgotten that a considerable number of persons mingle their own labor with capital; that is, they labor with their own hands and also buy or hire others to labor for them; but this is only a mixed and not a distinct class. No principle stated is disturbed by the existence of this mixed class.
Again, as has already been said, there is not of necessity any such thing as the free hired laborer being fixed to that condition for life. Many independent men everywhere in these States a few years back in their lives were hired laborers. The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while, and at length hires another new beginner to help him. This is the just and generous and prosperous system which opens the way to all, gives hope to all, and consequent energy and progress and improvement of condition to all. No men living are more worthy to be trusted than those who toil up from poverty; none less inclined to take or touch aught which they have not honestly earned. Let them beware of surrendering a political power which they already possess, and which if surrendered will surely be used to close the door of advancement against such as they and to fix new disabilities and burdens upon them till all of liberty shall be lost.
First Annual Message
December 3, 1861
http://www.presidency.ucsb.edu/ws/?pid=29502
I see American liberalism as being compatible with the concept of equality of opportunity. But it also has an element of meritocracy. Some individuals will excel in certain ways, and be rewarded accordingly. Or they will fail, and suffer accordingly.
ReplyDeleteThe ideal of quality of opportunity has not been realized.
The ideal of a meritocracy does exist for the poor.
The struggle between Labour and Capital is due to a conflict of interest. Resolving that conflict may resolve the conflict of attitudes which Lincoln was describing.
As I said, revolutionary within capitalism.
ReplyDeleteRevolutionary in terms of modern macroeconomics. Would you consider the full employment policies of the past as revolutionary? According to mainstream ideology, such policies are obsolete.
Revolutionary in terms of modern macroeconomics. Would you consider the full employment policies of the past as revolutionary? According to mainstream ideology, such policies are obsolete.
ReplyDeleteThe New Deal was revolutionary socially, politically, and economically. The question is whether it was a liberal advance in the state of capitalism or merely a historical aberration owing to the prevailing context.
Many people have assumed it to be an advance, but it is looking like it may have been an aberration stemming from the pressure of a socialist alternative and the need to compromise in order to co-opt the masses.
The retrenchment in economic policy through the waxing of Friedmanism and the waning of Keynesianism would suggest a temporary aberration. However, the Civil Rights movement of the Sixties and rise of social liberalism would argue that the liberal march is still on, although on hold in economics and economic policy.
"I get tired of JG advocates telling me that what middle aged people really need to be happy is a dead end minimum wage job. :-) Funny how the people making those claims are rarely middle aged."
ReplyDeleteThat's hardly surprising in an illiquid job market where people get stuck in the wrong job miles from home for decades. The problem is as usual insufficient jobs - and that means that the quality of the jobs deteriorates. Just like any other oligopoly that you are forced to use. The solution is increased competition.
There are of course other studies that show that after the euphoria of the change evaporates you end up with significant mental issues.
http://www.thinkadvisor.com/2014/06/30/the-secret-sadness-of-retired-men
http://www.thelocal.it/20140819/wives-suffer-from-retired-husband-syndrome
And of course there is the ultimate question for BIG enthusiasts - if you really believe that retirement make you happier, who are you going to make unhappy and do all the work? Who are going to be the 'slaves' servicing your 'leisure'? Why would they continue to vote for their 'enslavement'? How do you know you're not going to be one of those slaves?
Why would the slaves put up with getting less money for their effort and paying a 50% tax rate on it, all while being 'unhappy' - particularly as every day in a service economy they would be servicing the 'leisure' of 'happy' people? Why would they not seek to 'smash the system'?
As ever with political economy it is all about curve fitting evidence to fit a belief and create a persuasion case. The real picture is very complicated because it involves lots of individuals who all behave differently to the same environment based upon their personalities and motivations.
In other words - it's complicated.
@Random, my dad hated his job and retired ASAP, he never once regretted it.
ReplyDeleteMy mother, on the other hand, hated being a housewife and preferred to work, even if she didn't need the money and even if she didn't come out ahead after taxes.
We all know retired people who have no hobbies and are bored to tears, and would prefer to work. I view their situation as a type of mental disorder -- they have been so brainwashed by the Protestant work ethic that they feel guilty if they don't work. It's a reflection on how dysfunctional our society is.
Who would do the work if we offered a BIG? The Canadian MINCOME experiment proved that there was very little impact on workforce participation. The Brazilian Bolsa Familia BIG has not seen any reduction in workforce participation. European countries like Denmark with generous safety nets have higher workforce participation than America. The Minskian framing that we must choose between work and welfare is a false dichotomy.
Even in the presence of a generous safety net, most healthy prime age workers will chose to work because 1) it pays more than a BIG or 2) social pressure or personal fulfillment.
But some middle aged workers with failing health would use the BIG as a way to retire early. Young people would use the BIG to continue their education instead of accepting a dead end job. The unemployed would use the BIG to keep looking for a good job instead of accepting a dead end job. And those would all be good things.
The service economy is driven by inequality -- poor people perform services for the rich, not the other way around. Get rid of inequality and those service jobs go away.
The reality is that the fruits of our labor are enjoyed by the 1% while the 99% have seen their standard of living decline. As skilled workers have been replaced by machines and as American manufacturing has been replaced by foreign manufacturing, displaced workers have not seen any benefit, no increase in leisure time, no improvement in standard of living. The JG would not change that. The JG does not address the fundamental issues of our time -- inequality and automation.
Many people have assumed it to be an advance, but it is looking like it may have been an aberration stemming from the pressure of a socialist alternative and the need to compromise in order to co-opt the masses.
ReplyDeleteI don't believe that having a socialist alternative or having powerful unions is an aberration. I do believe that it is preferable to situations where there is a power imbalance.
The New Deal wasn't an advance, it was a necessary concession. It has since been rolled back and is no longer deemed necessary, let alone worth discussing.
The New Deal wasn't an advance, it was a necessary concession. It has since been rolled back and is no longer deemed necessary, let alone worth discussing.
ReplyDeleteThe Democratic Establishment agrees. The progressive wing of the Democratic Party, not so much.
The right believes that that have successfully killed the spirit of the New Deal and returned to the status quo ante, and that all that remains is to mop up the residual like privatizing SS and Medicare.
The real winners are the members of the US "aristocracy,"that is, the 0.001% who are steadily capturing more and more of the surplus nationally and globally.
"I view their situation as a type of mental disorder -- they have been so brainwashed by the Protestant work ethic that they feel guilty if they don't work. It's a reflection on how dysfunctional our society is."
ReplyDeleteIt is just normal human behavior.
"As skilled workers have been replaced by machines and as American manufacturing has been replaced by foreign manufacturing, displaced workers have not seen any benefit, no increase in leisure time, no improvement in standard of living. The JG would not change that. The JG does not address the fundamental issues of our time -- inequality and automation."
ReplyDeleteCome on now. Surely it is better for machines to do the work? The "skilled workers" skills are obsolete. Automation is not a problem. Because the skilled workers would dislike it?
And yes that reduces the imbalance between skilled and unskilled workers. Skilled workers might not like that idea.
Point taken about foreign manufacturing though. Tariffs and banning inferior imports are options.
Here in the UK steel workers have lost their jobs. Steel making from iron ore is a silly thing to be doing in the UK. We no longer have supplies of Iron Ore and there is sufficient diversity of steel supply from elsewhere. So why is there a difference between importing steel and importing the ore? UK steel works should be about recycling steel that is already here – and it should be near fully automated.
The engineering the steel workers should be doing is constructing automated housing production lines – creating energy efficient houses that can be simply bolted together on site.
Those who want a higher waged public sector job are very welcome to put the proposal forward to state or local taxpayers, or to the federal government.
So you have a democratic way of getting what you want. You just don't get it 'by right'."
But nobody is saying the JG will solve everything. The JG is aimed at the poor rather than the middle class.
My focus is on providing jobs for those that want to contribute and want a living income, and I think the sales pitch should be on that point - providing jobs for the people. Only the JG can provide jobs for the people.
Remember that Bill Mitchell's view of the Job Guarantee is that initially we should pay everybody who turns up at the JG office *whether we have a job ready for them or not*. The idea there is a short term 'basic income' that kicks up the aggregate demand in a depressed economy. Then most of the people on the JG will magically disappear into private employment - because of the increased supply required to deal with the increased demand.
You then only have to find JG jobs for the few people that are left.
Put another way in 'Merican terms - aren't you suggesting creating NON JOBS for the unskilled workers with obsolete skills.
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